Duplication, Like Beauty, Is In the Eye of the Beholder

Congress has kept up a drumbeat about duplication of federal government programs, resulting, ironically, in a stream of largely duplicative GAO reports examining the issue. The concern is that duplication may result in inefficient and wasteful uses of public funds. In its latest look, GAO identified 80 programs that support economic development in four agencies and departments: HUD, USDA, Commerce, and the Small Business Administration—and they could have identified even more if they had expanded their search to include Treasury, HHS, DOT, and others.

Federal agencies are responding to pressure from OMB and GAO to evaluate whether and how their programs overlap with other federal efforts. I have now contributed to two independent reviews of duplication in economic development. In 2008 we examined duplication in small business loan programs for the SBA. And we contributed to a Section 108 study that HUD released this month. A cousin of the better known Community Development Block Grant (CDBG) program, the Section 108 program provides an advance on CDBG funds, structured as a loan guarantee, to support local economic development.

What I’ve learned is that duplication, like beauty, is in the eye of the beholder. The voices asserting and denying duplication have been forceful, but the volume of the debate has not been matched by an understanding of the difficulties in making such determinations. While GAO has found that multiple programs are funding similar activities, these programs can often be differentiated on the basis of who receives funding, how it is used, and what outcomes are achieved. Complete overlap among economic development programs appears rare, but it is also clear that some programs partially overlap. Rather than just asking whether duplication exists, rigorous research can do more, informing policymakers of the value of operating separate programs and the costs of consolidation.

How do program participants view the Section 108 program? They overwhelmingly reported that the program was unique in the federal economic development landscape, claiming it allows local governments to take on riskier projects early in the development process, while other federal programs, only fund relatively safe projects. Stakeholders also said that Section 108’s repayment structure is more flexible than other federal programs and that it supports large-scale projects that other federal, state, and local programs cannot.

Where GAO sees duplication, the agencies see complementary programs. When making a sandwich, are peanut butter and jelly substitutes or complements? How about ham and turkey? Most dispassionate observers would say sometimes yes, sometimes no. Will the reasons cited by Section 108 participants be enough to convince skeptics about the unique contributions of the program? Probably not. Expect more duplication of the duplication battles.